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Buy On Time or Pay Cash Cost of Borrowing 1 . Terms of the loan a . Amount of the loan b . Length of

Buy On Time or Pay Cash
Cost of Borrowing
1.
Terms of the loan
a. Amount of the loan
b. Length of the loan (in years)
c. Monthly payment
2. Total loan payments made ($ per month
Less: Principal amount of the loan
Total interest paid over life of loan
Tax considerations:
Is this a home equity loan?
Do you itemize deductions on your federal tax return?
What federal tax bracket are you in? months)
3.
4.
5. Taxes saved due to interest deductions
7.($ x% Total after-tax interest cost on the loan
8.
Cost of Paying Cash
9. Annual interest earned on savings
(6% x
10.
Annual after-tax interest earnings
%
5
$188.70
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